The economic returns to hospital admitting privileges

Legal suits contesting the denial or termination of hospital staff privileges are the most common antitrust cases involving medical markets. There is, however, very little evidence about the economic implications for the physicians of having staff privileges. Using a nationally representative sample of self-employed physicians from 1992, this article presents estimates of the effects of hospital admitting privileges on physician earnings. The results indicate that for nonprimary care specialists with few admitting privileges, gaining an additional privilege increase earnings. This effect diminishes as the number of admitting privileges increases, however, and there are no economic gains beyond having three to four admitting privileges. Among primary care physicians, we detect no statistically significant effect of hospital admitting privileges on earnings. With the growing emphasis on managed care, physicians are being scrutinized both in terms of the quality of care they deliver and their impact on the economic performance of hospitals and managed care organizations. This suggests that the frequency of lawsuits involving the denial or rescission of medical staff privileges may assume even greater importance.